SECOND DIVISION

[G.R. No. 106671. March 30, 2000.]

HARRY TANZO , petitioner, vs . HON. FRANKLIN M. DRILON, in his

capacity as Secretary of Justice, MANUEL J. SALAZAR and MARIO
J. SALAZAR , respondents.

Virgilio M. Alameda for petitioner.

Solicitor General for public respondent.

SYNOPSIS

The assailed resolutions herein upheld the Quezon City Prosecutor's dismissal of
the criminal complaint for estafa led by petitioner Harry Tanzo against private
respondents Manuel Salazar and Mario Salazar. Private respondents are brothers who
were engaged in the business of forwarding and transporting "balikbayan" boxes from
California, U.S.A. to Metro Manila, Philippines. According to the petitioner, while he was in
Los Angeles, California, U.S.A., Mario tried to convince him to invest some money in the
said business. Mario had allegedly represented that petitioner's money will be held in trust
and administered by both him and his brother for the exclusive use of their forwarding and
transporting business. Petitioner further alleged that Mario promised him a return on his
investment equivalent to ten per centum (10%) for one month, at the end of which, his
money plus interest earned shall be returned to him. Eventually convinced by the private
respondents' representations and assurances, petitioner agreed to invest the total amount
of US $34,000.00 which he entrusted to his aunt, Liwayway Dee Tanzo, who was residing in
the U.S.A. Upon the expiration of the thirty-day investment period, petitioner demanded
from Mario in the States and Manuel in Quezon City proper accounting of his nancial
investment and/or the return of his capital plus interest earned. At the outset, private
respondents avoided their obligation to petitioner by making various excuses but after
persistent demands by the latter, Manuel nally admitted that their shipments had
encountered some problems with the Bureau of Customs. When private respondents
continued to ignore petitioner's demand for the return of his money, the latter led a
complaint-a davit for estafa against private respondents before the O ce of the Quezon
City Prosecutor. The prosecutor dismissed the said complaint on the ground of lack of
territorial jurisdiction over the offense charged, as it was not committed in Quezon City.
Petitioner's motion for reconsideration was denied. Petitioner then led a petition for
review with the Secretary of Justice. The Secretary of Justice dismissed the petition for
review because of insu cient evidence to support the crime of estafa. Dissatis ed,
petitioner sought a reconsideration of the resolution. However, the Secretary of Justice
denied petitioner's motion for reconsideration. Hence, this petition.
A judicious scrutiny of the evidence on record led the Court to agree with the
Secretary of Justice that the transactions between the parties herein were simple loan and
did not constitute a trust agreement that would hold the private respondents liable for
estafa. Evidence for the petitioner was his bare assertion that he invested the money on
the basis of a trust agreement. The Court dismissed the petition.

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 SYLLABUS

1. REMEDIAL LAW; EVIDENCE; WHEN MAY COLLATERAL FACTS BE RECEIVED;

CASE AT BAR. — [C]ollateral facts may be received as evidence under exceptional
circumstances, as when there is a rational similarity or resemblance between the
conditions giving rise to the fact offered and the circumstances surrounding the issue or
fact to be proved. Evidence of similar acts may frequently become relevant, especially in
actions based on fraud and deceit, because it sheds light on the state of mind or
knowledge of a person, it provides insight into such person's motive or intent, it uncovers a
scheme, design or plan; or it reveals a mistake. The series of transactions between M.J.S.
International and Liwayway Dee Tanzo were entered into under similar circumstances as
those surrounding the contract between petitioner and Mario. Just like the alleged trust
agreement between petitioner and Mario, the loan contracts between M.J.S. International
and Liwayway Dee Tanzo provide that the creditor shall lend to the debtor a speci c
amount for use by the latter in its business operations. Petitioner also admits that he
entrusted the checks to Liwayway Dee Tanzo for investment in private respondents'
business. This shows that private respondents were transacting directly with Liwayway
Dee Tanzo in the usual manner that they conduct business, that is the loan of money for
stipulated interest. Hence, private respondents' modus operandi, if there ever was one, in
raising additional capital for M.J.S. International was to borrow money from willing
investors. It is thus unlikely, considering the scheme of things, that private respondents
would all of a sudden deviate from an established business practice to enter into a trust
agreement with the petitioner.
2. CRIMINAL LAW; ESTAFA; DEBTOR CANNOT BE HELD LIABLE THEREFOR BY
MERELY REFUSING TO PAY OR BY DENYING THE INDEBTEDNESS; RATIONALE. — This
Court has ruled that when the relation is purely that of debtor and creditor, the debtor
cannot be held liable for the crime of estafa, under Article 315, par. 1 (b) of the Revised
Penal Code, by merely refusing to pay or by denying the indebtedness. The reason behind
this rule is simple. In order that a person can be convicted of estafa under the said
provision, it must be proven that he has the obligation to deliver or return the same money,
goods or personal property that he has received. The obligation to deliver exactly the same
money, that is, bills or coins, is non-existent in a simple loan of money because in the latter,
the borrower acquires ownership of the money borrowed. Being the owner, the borrower
can dispose of the thing borrowed and his act will not be considered misappropriation
thereof.
3. CIVIL LAW; SPECIAL CONTRACTS; SIMPLE LOAN; NATURE THEREOF;
PRESENT IN CASE AT BAR. — The true nature of the contract between petitioner and
private respondents was that of a simple loan. In such a contract, the debtor promises to
pay to the creditor an equal amount of money plus interest if stipulated. It is true that
private respondents failed to ful ll their promise to petitioner to return his money plus
interest at the end of one month. However, mere non-compliance of a promise to perform
a thing does not constitute deceit because it is hard to determine and infer a priori the
criminal intent to the person promising. In other words, deceit should be proved and
established by acts distinct from and independent of, the non-compliance of the promise,
and this, petitioner failed to do.
aASEcH

DECISION

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 DE LEON , JR. , J : p

Before us is a special civil action for certiorari under Rule 65 of the Rules of Court
seeking to annul and set aside the April 10, 1992 Resolution of public respondent
Secretary of Justice, as well as the latter's August 6, 1992 Resolution denying the
petitioner's motion for reconsideration. The assailed Resolutions upheld the Quezon City
Prosecutor's dismissal of the criminal complaint for estafa led by petitioner Harry Tanzo
against private respondents Manuel and Mario Salazar. LLjur

The facts are:

Private respondents are brothers who were engaged in the business of forwarding
and transporting "balikbayan" boxes from California, U.S.A to Metro Manila, Philippines.
Manuel J. Salazar (hereinafter "Manuel") managed the Philippine side via MANSAL
Forwarders, a business registered in his name with principal o ce at No. 48 Scout Tobias
Street, Quezon City. On the other hand, Mario J. Salazar (hereinafter "Mario") handled the
U.S. side of the forwarding business as General Manager of M.J.S. International, Inc., a
corporation with principal office at No. 3400 Fletcher Drive, Los Angeles, California, U.S.A.
According to the petitioner, sometime in February of 1989, while he was in Los
Angeles, California, U.S.A., Mario tried to convince him to invest some money in the said
business. Mario had allegedly represented that petitioner's money will be held in trust and
administered by both him and his brother for the exclusive use of their forwarding and
transporting business. Petitioner further alleged that Mario promised him a return on his
investment equivalent to ten per centum (10%) for one month, at the end of which his
money plus interest earned shall be returned to him.
When petitioner returned to the Philippines, it was Manuel's turn to persuade him to
part with his money under the said investment scheme. Eventually convinced by the private
respondents' representations and assurances, petitioner agreed to invest the total amount
of US $34,000.00 which he entrusted to his aunt, Liwayway Dee Tanzo, who was residing in
the U.S.A. Thus, petitioner issued several personal checks made out to Liwayway Dee
Tanzo, 1 or to "Calfed", 2 or payable to cash, 3 to wit:
California Federal
Savings and Loan Asso. Date of Check Amount
Check Numbers

319 August 04, 1989 US$5,000.00

320 August 09, 1989 9,000.00
321 August 09, 1989 9,000.00
322 August 08, 1989 2,000.00
323 August 10, 1989 4,000.00
324 August 14, 1989 5,000.00
Total US $34,000.00 4
Except for California Federal Check No. 322 which was encashed by Mario himself,
private respondents received the proceeds of the above checks through Liwayway Dee
Tanzo on several occasions in August 1989.
Meanwhile, Mario encountered serious liquidity problems 5 that prompted him to
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 petition the U.S. Bankruptcy Court for a release from his debts on September 27, 1990. He
was ordered "released from all dischargeable debts" by the said court on January 25,
1991. 6
Upon the expirations of the thirty (30) day investment period, petitioner demanded
from Mario in the States and Manuel in Quezon City proper accounting of his nancial
investment and/or the return of his capital plus interest earned. At the outset, private
respondents avoided their obligation to petitioner by making various excuses but after
persistent demands by the latter, Manuel nally admitted that their shipments had
encountered some problems with the Bureau of Customs. Thus, on January 29, 1990,
Manuel executed a letter authorizing the petitioner to withdraw documents to assist in the
release of their shipments from the Bureau of Customs. However, when petitioner
attempted to secure the release of the "balikbayan" boxes from the Bureau of Customs, he
discovered that the same had actually contained smuggled goods and were accordingly
seized and forfeited in favor of the government. dctai

When private respondents continued to ignore petitioner's demand for the return of
his money, the latter led, on June 31, 1991, a complaint-a davit for estafa against private
respondents before the O ce of the Quezon City Prosecutor (hereinafter "prosecutor"). In
a resolution dated September 4, 1991 the prosecutor dismissed the said complaint on the
ground that "[t]he Quezon City Prosecutor's O ce has no territorial jurisdiction over the
offense charged as it was committed not in Quezon City, Philippines." 7 Petitioner's motion
for reconsideration of the said resolution was denied by the prosecutor on the same
ground. 8
Petitioner then led a petition for review of the dismissal of his complaint for estafa
against private respondents with then Secretary of Justice, Franklin M. Drilon. On April 10,
1992, Acting Secretary of Justice, Eduardo G. Montenegro dismissed the said petition for
review in a resolution which reads:
xxx xxx xxx

An evaluation of the records of the case disclosed that the incident

complained of took place in the United States, and under Article 2 of the Revised
Penal Code, our courts have no jurisdiction over offenses committed outside the
territory of the Philippines. While the rule allows certain exceptions, the facts do
not show that the case falls within any of said exceptions. Hence, we are
convinced, and hereby hold, that there is no cogent reason to disturb the ndings
of the Quezon City Prosecutor's Office in the questioned resolution.

ACCORDINGLY, your petition is dismissed for lack of merit. 9

Dissatis ed, petitioner sought a reconsideration of the above resolution However,

the Secretary of Justice denied petitioner's motion for reconsideration, and stated in a
resolution dated August 6, 1992 that:
xxx xxx xxx
After a careful analysis of the issues raised in your motion and a re-
evaluation of the evidence on record, we nd no valid reason, to justify a reversal
of our previous resolution.

Aside from your bare allegations that there was a trust agreement between
you and the respondents, and that deceit and misappropriation which are the
important elements of estafa were committed by them in the Philippines, you did
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 not present any concrete or convincing evidence support the same. On the
contrary, your own evidence shows that you transacted with Mario Salazar
through your aunt, Liwayway Dee Tanzo. This bolsters the claim of Manuel
Salazar that the sums of money received by Mario from Liwayway in Los
Angeles, California, U.S.A., were simple loans as shown by the loan contracts
executed by them in the said place.
WHEREFORE, your motion for reconsideration is hereby denied. 10

Hence, this petition.

Petitioner contends that the Secretary of Justice committed grave abuse of
discretion in dismissing the criminal case for estafa against the private respondents on
the ground of lack of jurisdiction as the crime charged was actually committed in the
United States. 11
At the outset, we must point out that the Secretary of Justice dismissed the criminal
charges against the respondents not only for lack of jurisdiction but also, and more
importantly because it found petitioner's evidence insu cient to support his charge of
estafa against the private respondents. Thus, the immediate issue for the determination of
this Court is whether prima facie evidence exists that the private respondents had
committed the crime of estafa and should be held for trial. After all, a nding that
petitioner's complaint for estafa is not supported by that quantum of evidence necessary
to justify the ling of a criminal case in court shall render irrelevant the question of
territorial jurisdiction over the offense charged.
A judicious scrutiny of the evidence on record leads us to agree with the Secretary
of Justice that the transactions between private respondents, particularly, Mario and the
petitioner, were simple loans, and did not constitute a trust agreement, the violation of
which would hold the private respondents liable for estafa.
Petitioner failed to present evidence other than his bare assertion that he had
invested money in private respondents' business on the basis of a trust agreement. The
photocopies of the checks allegedly subject of the trust agreement did more damage than
good to petitioner's proposition. None of these checks were issued to either Mario or
Manuel and were in fact payable to "Liwayway Dee Tanzo," "Calfed" or "Cash." Moreover,
only one of these checks was actually encashed by Mario, the rest by Liwayway Dee Tanzo.
On the basis of the foregoing alone, private respondents could have completely denied the
existence of their liability to petitioner as neither proof in writing nor witnesses exist to
substantiate petitioner's claim of a trust agreement between himself and the private
respondents. On the contrary, Manuel does not deny that Mario had indeed received
money from the petitioner, albeit claiming that the latter's liability thereunder is purely civil
in nature for being rooted in a simple loan contract. Manuel offered in evidence copies of
the contracts of loan entered into between M.J.S. International and Liwayway Dee Tanzo.
12 We agree with the petitioner that these loan contracts do not by themselves prove that
his agreement with the private respondents was also a loan. As correctly pointed out by
the petitioner, he is not a party to these contracts that clearly stipulate "Liwayway Dee
Tanzo" as creditor and "M.J.S. International represented by its General Manager, Mario J.
Salazar" as debtor.
These loan contracts may, however, be given evidentiary value in support of
Manuel's claim that the agreement with petitioner was no different from the loan contracts
with Liwayway Dee Tanzo. Under the rule of res inter alios acta, evidence that one did or did
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 not do a certain thing at one time is not admissible to prove that he did or did not do the
same or similar thing at another time, but it may be received to prove a speci c intent or
knowledge, identity, plan, system, scheme, habit, custom or usage, and the like. 13
Elaborating thus, we have held that: prcd

[C]ollateral facts may be received as evidence under exceptional

circumstances, as when there is a rational similarity or resemblance between the
conditions giving rise to the fact offered and the circumstances surrounding the
issue or fact to be proved. Evidence of similar acts may frequently become
relevant, especially in actions based on fraud and deceit, because it sheds light on
the state of mind or knowledge of a person, it provides insight into such person's
motive or intent, it uncovers a scheme, design or plan, or it reveals a mistake. 14
(Italics supplied).

The series of transactions between M.J.S. International and Liwayway Dee Tanzo
were entered into under similar circumstances as those surrounding the contract between
petitioner and Mario. Just like the alleged trust agreement between petitioner and Mario,
the loan contracts between M.J.S. International and Liwayway Dee Tanzo provide that the
creditor shall lend to the debtor a speci c amount for use by the latter in its business
operations. 15 Petitioner also admits that he entrusted the checks to Liwayway Dee Tanzo
for investment in private respondents' business. This shows that private respondents were
transacting directly with Liwayway Dee Tanzo in the usual manner that they conduct
business, that is the loan of money for stipulated interest. Hence, private respondents'
modus operandi, if there ever was one, in raising additional capital for M.J.S. International
was to borrow money from willing investors. It is thus unlikely, considering the scheme of
things, that private respondents would all of a sudden deviate from an established
business practice to enter into a trust agreement with the petitioner.
In view of the foregoing and the unfortunate fact that petitioner has failed to present
controverting evidence, this Court is constrained to adopt private respondents' position
that the agreement between Mario and the petitioner was in the nature of a simple loan
agreement.
Therefore, petitioner's contention that private respondents have committed the
crime of estafa.
1. With unfaithfulness or abuse of confidence, namely:
xxx xxx xxx
b) By misappropriating or converting, to the prejudice of another,
money, goods or any other personal property received by the offender in trust, or
on commission, or for administration, or under any other obligation involving the
duty to make delivery of, or to return the same, even though such obligation be
totally or partially guaranteed by a bond, or by denying having received such
money, goods, or other property; 16

necessarily fails. This Court has ruled that when the relation is purely that of debtor and
creditor, the debtor cannot be held liable for the crime of estafa, under the above
quoted provision, by merely refusing to pay or by denying the indebtedness. 17 The
reason behind this rule is simple. In order that a person can be convicted of estafa
under Article 315, par. 1(b) of the Revised Penal Code, it must be proven that he has the
obligation to deliver or return the same money, goods or personal property that he has
received. The obligation to deliver exactly the same money, that is, bills or coins, is non-
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 existent in a simple loan of money because in the latter, the borrower acquires
ownership of the money borrowed. 18 Being the owner, the borrower can dispose of the
thing borrowed and his act will not be considered misappropriation thereof. 19
In the alternative, petitioner accuses private respondents of committing the crime of
estafa under Article 315, par. 2(a) of the Revised Penal Code which provides as follows:
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of the fraud
(a) By using, a ctitious name, or falsely pretending to possess power,
in uence, quali cations, property, credit, agency, business or imaginary
transactions; or by means of other similar deceits.

Speci cally; petitioner contends that he was deceived by private respondents to part
with his money on their representation that the same would be held in trust for
investment in their legitimate freight business only to nd out later on that private
respondents used his money for the illicit activity of smuggling prohibited goods into
the Philippines. 20
This contention cannot be sustained for lack of evidence. Petitioner claims that
private respondents used his money for smuggling. The fact, however, that several
shipments from M.J.S. International Freight Services to Mansal Forwarders were seized
and forfeited by the Bureau of Customs for containing smuggled items does not prove
that petitioner's money was indeed used by private respondents in the said illegal activity.
Petitioner himself admits that he and his relatives were regular clients of private
respondents since 1988. 21 It cannot, thus, be doubted that the private respondents were
likewise engaged in a legitimate forwarding business in which business petitioner's money
could have actually been invested. cdtai

The letter issued by Manuel authorizing petitioner to withdraw documents covering

the containers that were later seized by the Bureau of Customs bears little weight in view
of the fact that the same was not even presented before the prosecutor and the Secretary
of Justice. Further, as correctly pointed out by the private respondents, it is a mere blank
form that does not even indicate petitioner's name as authorized bearer. 22
As we have explained earlier, the true nature of the contract between petitioner and
private respondents was that of a simple loan. In such a contract, the debtor promises to
pay to the creditor an equal amount of money plus interest if stipulated. 23 It is true that
private respondents failed to ful ll their promise to petitioner to return his money plus
interest at the end of one month. However, mere non-compliance of a promise to perform
a thing does not constitute deceit 24 because it is hard to determine and infer a priori the
criminal intent to the person promising. 25 In other words, deceit should be proved and
established by acts distinct from and independent of, the non-compliance of the promise,
2 6 and this, petitioner failed to do.

WHEREFORE, the petition is hereby DISMISSED. LibLex

SO ORDERED.
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

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 Footnotes
1. California Federal checks nos. 319, 323 and 324 were payable to the order of Liwayway
Dee Tanzo, Rollo, pp. 22, 26-27.
2. California Federal check no. 321 was payable to "Calfed" or California Federal Savings
and Loan Association, Rollo, p. 24.
3. California Federal checks nos. 320 and 322 were payable to cash. Rollo, pp. 23 and 25.
4. Rollo, p. 5.
5. Rollo, p. 92.
6. Rollo, p. 131.
7. Rollo, p. 36.
8. Rollo, p. 39.
9. Rollo, p. 20.
10. Rollo, p. 21.
11. Rollo, p. 8.
12. Rollo, pp. 125-130.
13. Section 34, Rule 130 of the Rules of Court.

14. Cruz vs. Court of Appeals, 293 SCRA 239, 255 (1998).
15. Rollo, pp. 125-130.
16. Article 315, par. 1(b) of the Revised Penal Code.
17. Yam vs. Malik, 94 SCRA 30, 35 (1979) citing U.S. vs. Ibañez, 19 Phil. 559 (1911).
18. Art. 1953 of the Civil Code. — A person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay to the creditor an
equal amount of the same kind and quality.
19. Yam v. Malik, supra at pp. 34-35.
20. Rollo, p. 15.
21. Rollo, p. 4.
22. Rollo, p. 28.
23. Supra, see note 18.
24. Gregorio, A., FUNDAMENTALS OF CRIMINAL LAW REVIEW 810 (9th ed., 1997), citing
People vs. Villarin, 50 O.G. 262.
25. Ibid., citing People vs. Yee, CA-G.R. No. 21602-R, Oct. 2, 1958.
26. Supra, see note 20.

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